Newsflash

+++ DAIMLER said that earnings slumped in the 4th quarter, despite the company generating higher revenue and selling more cars, and declared a lower dividend for the year. After-tax profit plunged to €1.64 billion from €3.22 billion in the same period a year earlier. Revenue grew 7 % to €46.61 billion. Earnings before interest and taxes fell 22 % to €2.67 billion from €3.42 billion. “For Daimler, 2018 was a year of strong headwinds. This is also reflected in our financial results and our share price”, chief executive Dieter Zetsche said. The maker of Mercedes-Benz cars said that for 2019 it expects slight growth in unit sales, revenue and profit. +++

+++ South Korea will produce 6.2 million units of FUEL CELL electric vehicles and build 1,200 refilling stations across the country by 2040, in a major industrial push aimed at securing energy independence and assuming a leadership role in hydrogen technology. In its road map, the government said it would diversify the hydrogen supply portfolio, increase the supply volume to 5.26 million tons in the next 20 years and lower the market price of the energy source to less than 3,000 won per kilo. The Seoul government will also support the industrial and domestic use of fuel cells for electricity and develop ships, trains and construction machinery powered by hydrogen, the Ministry of Trade, Industry and Energy said in a statement. The road map was announced in Ulsan, a southeastern industrial city with President Moon Jae-in in attendance. According to the plan, the number of hydrogen-powered vehicles in the country will reach 80,000 in less than four years and 1.8 million by 2030. The government will start providing subsidies for fuel-cell electric taxis and trucks while working with local governments to increase the number of fuel-cell electric buses to 2,000 by 2022. It also plans to start replacing all 820 police buses with fuel-cell electric buses in 2021. The subsidies, the government believes, will drive up production capacity and lower costs to around 30 million won, half the price of an FCEV sold on today’s market, by 2025. Stressing the government’s determination to pursue a hydrogen economy, President Moon said fuel cell technology would lead the country’s future growth. “For us, it is a golden opportunity that could fundamentally transform the state energy system and secure new growth engines (at the same time)”, said Moon. “We can take the lead in (creating) a hydrogen economy by connecting (the technology) with traditional manufacturing sectors including the auto, shipping and petrochemical industries”. The rationale behind the Korean government’s rather drastic hydrogen economy plans lies in the strong potential of hydrogen fuel to create new jobs and revive sluggish manufacturing businesses, including small and medium-sized companies. The aim of the government’s road map is to bring in fresh investment and create jobs in traditional industries such as steel production, petrochemicals and mechanical engineering, according to industry watchers. By 2040, the government expects to generate 43 trillion won worth of added value a year and create 420,000 new jobs in the market. Korea’s shift toward hydrogen as an energy source is also based on hopes of decarbonizing the country’s entire transportation fleet and reducing its heavy reliance on imported oil. The country relies on oil imports from the Middle East for most of its energy needs. Asia’s fourth-largest economy is among a few countries vying to secure the top position in hydrogen technology. Both China and the US have set their 2030 targets for hydrogen vehicles at 1 million, while Japan plans to provide 800,000 FCEVs across the country in the same year. Korea’s Energy Ministry believes the country could become a first mover in hydrogen technology, overtaking competitors such as the US and China. “We have world-class technology for hydrogen cars and fuel cells and also have (a significant) production capacity for hydrogen byproducts from petrochemical complexes as well as a (strong) supply network for natural gas across the country”, said vice Energy Minister Jeong Seung-il. Both mass production and the goals in the road map are feasible, he asserted. Ulsan, where the announcement was made, is home to major petrochemical and auto manufacturing complexes as well as to the Korean auto giant Hyundai Motor. The carmaker takes the lead in the hydrogen car market with the Nexo, which can go up to 609 kilometers on a single charge, giving it the longest range in the world for a green car. +++

+++ Hyundai will set up a Chinese subsidiary to sell its independent luxury brand GENESIS in the country. The automaker said that it is in the process of establishing a sales subsidiary for Genesis with the aim to launch it in the first half of next year. The luxury car market in China is growing constantly with sales this year expected to reach a record of some 3 million cars. It broke the 2 million milestone in 2016 and posted 18 % growth to 2.56 million in 2017 and sold 2.81 million in 2018. Since becoming an independent brand from Hyundai in 2015, Genesis has entered the Middle Eastern, North American and Russian markets, but has yet to venture into China. “We are reviewing candidate cities for the subsidiary including Shanghai”, a Hyundai source said. “We will first focus on building a sales network and promoting the brand”. Whether the company will manufacture the Genesis locally has yet to be decided, the source added. +++

+++ Car registrations in GERMANY fell 1.4 % in January even as sales of diesel cars started to recover. New-car sales were 265,702. Sales of diesel cars increased 2.1 %, giving the powertrain a 34.5 % market share. Gasoline car sales dropped by 8.1 % for a 57.6 % share. The VDIK importers association said recovering demand from fleet buyers and wider availability of diesel cars that comply with new emissions standards helped diesel sales to rebound. Germany’s automakers have been offering incentives to encourage owners to swap older, polluting diesel cars for new models. Volkswagen said last month that it will expand trade-in incentives to owners of older vehicles beyond the 15 most heavily polluted cities across the whole of Germany. Sales to business fleets rose 1.6 % for a 66.8 % market share in January while sales to private customers fell 7 % for a 33.1 % share. Sales of full-electric cars grew 68 % for a 1.7 % share. Hybrid car sales rose 66 % for a 5.7 % share, although sales of plug-in hybrids plunged 26 % for a 0.8 % share as the effects of the new WLTP emissions-testing regime continued to weigh on their availability. Major brands had mixed results last month. Porsche’s registrations plunged 54 %, Nissan’s volume fell 40 % and Honda was down 35 %t. Alfa Romeo sales declined by 32 %. Other German brands had a bad sales month in addition to Porsche. BMW’s volume fell 7.5 %, Opel was down 6.6 %, VW brand was down 6.5 % and Mercedes-Benz registrations dropped 4.3 %. Among the winners, Tesla rose 118 %, Volvo gained 40 % and Ford registrations were up 15 %. +++

+++ Nissan plans to freeze remuneration payments to its former chairman Carlos GHOSN totaling ¥9 billion ($82 million) which the automaker alleges are illegal, a source close to the matter said. Tokyo prosecutors have already indicted Ghosn over the understatement of his remuneration by that amount in Nissan’s securities reports over the eight years through last March. Nissan as a company has also been indicted on the charge. The automaker plans to book ¥9 billion in additional pay to Ghosn in its earnings report without actually disbursing it, the source said, though Ghosn has told investigators the unstated pay has not been finalized and did not need to be shown in the securities reports. Nissan is also considering filing a damages suit against the former boss over separate financial misdeeds, including purchases of luxury homes, the source said. Nissan dismissed Ghosn as chairman shortly after he was arrested on Nov. 19 and as its own internal investigation, triggered by a whistleblower report, found the former boss to be engaged in financial misconduct. The company said it will hold an extraordinary shareholders’ meeting on April 8 to seek approval to dismiss Ghosn and his close aide as directors and appoint alliance partner Renault’s chairman as a new board member. Nissan’s board decided to nominate Renault Chairman Jean-Dominique Senard as its new member, while removing Ghosn and Greg Kelly, who was also arrested for alleged conspiracy in the financial misdeeds at Nissan. Ghosn and Kelly have been stripped of their roles as chairman and representative director, respectively, but remain board members. +++

+++ Sales of HYUNDAI and its affiliate Kia in the United States grew from a year earlier in January, the companies said, with both reporting sharp increases in sales of SUVs. Hyundai sold 40,796 cars in the US last month, up 2.9 % from the same month last year. The company said its sales of SUVs jumped 37 % on-year to 21,007 units, accounting for more than half of its overall sales. US sales of Kia Motors gained 4.9 % to 37,376 vehicles over the cited period. The country’s second-largest automaker partly attributed the increase to a sharp rise in sales of SUVs, with sales of its Sorento and Sportage cars rising 9.8 % and 4.4 % on-year, respectively. +++

+++ Fitch Ratings said it has placed JAGUAR LAND ROVER ’s credit ratings under review for possible downgrades, citing increasing risks of a disorderly Brexit. JLR had said in January that there would be a week-long pause in production in April due to potential disruption from Brexit and trimmed production. “The group has a significant trade imbalance and production bias to the UK and could be significantly affected by trade barriers and various logistic issues”, the credit rating agency said, placing JLR’s long-term ratings and senior obligations at ‘BB’ on “Watch Negative”. Fitch said the review was prompted by uncertainty ahead of Brexit, which could lead to lower sales and higher costs that could strain the company’s liquidity position. Prime Minister Theresa May’s Brexit deal was rejected in parliament last month and the government is trying to make changes to win the support of lawmakers even as the divorce date for Britain’s departure from the European Union looms less than two months away. JLR, based in central England, is also planning to prune its workforce as it battles to return to profitability amid lower Chinese demand and a slump in European diesel sales. JLR and its parent Tata Motors had their credit pushed deeper into junk status in December by S&P Global as the agency cited weaker-than-expected profitability at the UK automaker. +++

+++ KIA ’s sales expanded last year, but profits faltered. Korea’s second-largest carmaker by sales said it posted 94.3 billion won ($84 million) in net profit for the fourth quarter last year, a 10 % drop year on year. Though the carmaker’s revenue in the 4th quarter increased by 3.6 % to 13.47 trillion won due to increased sales, the company said the Korean won’s strength against the U.S. dollar dragged down profits. A similar trend is evident in the company’s annual earnings report. The company posted 54.17 trillion won in revenue for the whole of last year, a 1.2 % increase from the previous year. Global sales also increased by 2.4 % during the year, selling more than 2.8 million units. Despite expanded sales, the company’s net profit was limited to 1.16 trillion won, a 19.4 % jump from 2017, but still below market expectations or the company’s average profit recorded between 2014 and 2016. Profit in 2017 fell to below a trillion won due to a one-off cost of around a trillion won that was reflected that year after a local court ordered the company to make an overdue payment to employees. The goal this year for Hyundai’s sister company is to ramp up profitability, especially in the U.S. and Chinese markets, with new car launches and stronger SUV lineups. The automaker also plans to tackle emerging markets like Russia and India with localized models. Kia is betting big on its Telluride SUV to turn its business around in the U.S. market. The largest SUV yet in Kia’s lineup will launch in the United States during the first half of this year. “As we launch new cars in the U.S. market including the Telluride and new Soul and diversify our product mix, we expect our profitability to improve”, said Joo Woo-jeong, chief financial officer at Kia, during a conference call with analysts. “The Telluride was well received at the Detroit Motor Show and its image as an off-roader fits well with demands in the U.S. market”. For China, Joo said Kia will strengthen its local dealer network and better manage car inventories there to improve business. The company is also planning on launching dedicated SUV models for the Chinese market. While Kia sold 370,000 cars in China last year, it hopes to sell 410,000 cars this year based on the new strategies. Joo admitted that “China is the most difficult market for Kia” at the moment. Kia plans to sell a total of 2.92 million cars this year, a 3.9 % increase from last year. +++

+++ NISSAN ’s board has chosen as a director Jean-Dominique Senard, who was recently appointed chairman at the Japanese automaker’s alliance partner Renault. Nissan said in a statement that its board decided to hold an extraordinary shareholders’ meeting on April 8, to remove its former chairman, Carlos Ghosn. Earlier, he also was dismissed as chairman of smaller alliance partner Mitsubishi. He resigned recently as chairman and chief executive of Renault. Nissan did not say if Senard was being considered to replace Ghosn as chairman. Renault named Senard of Michelin as its chairman and Renault executive Thierry Bollore as its chief executive last month. Ghosn had previously held both posts. Nissan said nominations for its board of directors also will be submitted to its annual general shareholders’ meeting set for June. A special Nissan committee is due to draw up proposals for stronger corporate governance by late March. +++

+++ Volvo spin-off POLESTAR has confirmed that its upcoming Tesla Model 3 baiting small saloon named 2 will be revealed at midday on 27 February, through a live-streamed online event. Little else has been communicated about Polestar’s second standalone model and first fully electric car, but it will make its way to the Geneva Motor Show the week after for a full public debut. Volvo’s all-electric performance sub-brand has already revealed the 1, a sleek 600 hp 2-door coupe costing upwards of €160,000. The firm’s second car will be considerably cheaper, and is said to have the baby Tesla within its sights. A full launch is expected in 2020. Polestar is a brand reborn and it doesn’t plan on wasting any time securing a place as a major player in the burgeoning global electric car market. From racing team and fettler of hot Volvos to a standalone EV performance brand in its own right, Polestar has evolved quickly. Thomas Ingenlath, Polestar’s chief executive officer, explained: “The 2 will join the competition with Tesla Model 3, so people should have an understanding of the size and the price tag as well. It will start around €40,000”. That price range will top out at around €60,000 and for the money, buyers will be getting a performance saloon built on Volvo’s new CMA platform. Although the 1 is a hybrid, utilising a bespoke version of the Volvo’s plug-in hybrid technology, the 2 and every Polestar thereafter will be pure electric. Also, unlike the 1, the 2 will be available in right-hand drive. The brand is targeting a 500 killometres range for the 2, and the 3 coupe-SUV that will follow later. Ingenlath is keen to play down any plans to usurp Tesla. “We are not saying it’s a Tesla killer, we are here to vividly compete with them in the market. We will launch Polestar 2 in the second half of 2019 and production will begin around the start of 2020”. The other area where the 2 is expected to diverge from the 1 is in the design department. Speaking at the 2018 Goodwood Festival of Speed, Polestar’s chief operating officer Jonathan Goodman acknowledged that the 1 uses similar design themes to current Volvo models, before indicating that the 2 would begin to establish Polestar’s own look. Though it will be a model in its own right, it’s still expected to borrow heavily from the Volvo 40.2 concept car from 2016. Polestar will also underline its difference from Volvo in the way customers access its cars. As well as being able to buy the cars outright online or through one of Polestar’s 80 planned ‘Polestar Spaces’ in town centres and shopping hubs, the company will also sell its models through a subscription service. Buyers will pay a flat monthly fee that covers the cost of the car, servicing and insurance over a 2 or 3 year period. Once the contact is up the car is simply handed back to Polestar. Ingenlath said: “In generations to come I can see they will not be happy to pay €60,000 on an object they have to sell again. The modern way is not to do that. There are better ways. The way you own a Polestar, we believe is appealing to people, as you have a much more precise idea of what it actually costs to own. It is a very clear and committed price per month and is hassle free”. Once the car has been returned to Polestar the car is then sent out on a second subscription service, likely to be at a discounted price. “What happens after a second subscription is an open question. But even then they are not at their end, they still have a value; the cars are very easy to monitor where they are in their lifetime”, Ingenlath explained. +++

+++ The PSA Group has obtained a license from local authorities to test an autonomous vehicle on roads in the southwest China municipality of Chongqing. The automaker is using a self-driving Peugeot 4008 crossover, which was assembled at PSA’s joint venture with Dongfeng Motor Group. PSA has been testing autonomous vehicles in France since 2015. The challenge in adapting its autonomous driving technology for China lies in the differing local environment, infrastructure, map system and road users from those in Europe, PSA said. 3 European luxury car brands (BMW, Audi and Mercedes-Benz) have already received permits from other Chinese cities to test self-driving vehicles on local roads. +++

+++ SLOVAKIA ’s finance minister called for cooperation with South Korea in a wide-range of areas such as hydrogen fuel cell electric vehicles and infrastructure, the government said. Peter Kazimir made the comments in a meeting with his South Korean counterpart Hong Nam-ki at the government complex building in central Seoul, calling Asia’s 4th-largest economy a very important country for Slovakia, according to the Ministry of Economy and Finance. Hong asked Kazimir to provide support to South Korean firms operating in Slovakia as he expressed hope for deepening economic cooperation between the 2 partners. “The 2 sides deeply share the view of expanding economic cooperation in various areas”, the ministry said of the meeting. About 100 South Korean companies operate in Slovakia, including Kia. In 2018, South Korea exported $2.7 billion worth of goods to Slovakia while importing goods worth $186 million from the central European country, according to the ministry. South Korea said it will increase the number of hydrogen fuel cell electric vehicles to about 80,000 units by 2022 as part of a broader effort to give a boost to the “hydrogen economy”. South Korea views the hydrogen economy as a new growth engine for its economy, which has relied heavily on semiconductors for decades. Global carmakers have been racing to go eco-friendly amid tightened regulations on emissions of greenhouse gases, which scientists say are to blame for global warming. A hydrogen fuel cell electric car emits only water vapor as it converts stored hydrogen into electricity to turn the drive motor. +++

+++ Kia has announced it has begun rolling out the facelifted model of its SORENTO . The updated SUV comes with new safety features applied to all of its diesel trims and a refreshed design. The diesel version of the Sorento will have smart safety features, such as lane keep assist, lane departure warning, driver attention warning and others on all of its trims. As for design, the automaker said it applied a newly designed dark chrome grille on all of its models, with the highest trim model installed with 19-inch chrome alloy wheels. The new model also comes with a new premium trim, which features more options, such as rear occupant alert and a head-up display. +++

+++ SSANGYONG , the Korean unit of Indian carmaker Mahindra, said its net losses narrowed for the October-December period from a year earlier on a strengthened lineup. Net losses reached 3.99 billion won ($3.59 million) in the 4th quarter from 30.25 billion won a year ago. Robust sales of the Rexton and the Tivoli helped improve the bottom line. Operating losses stood at 3.48 billion won in the final quarter from 2.57 billion won a year ago. Sales rose 17 % to 1.053 trillion won from 902.16 billion won during the same period. For 2018, net losses slightly improved to 61.84 billion won from 65.82 billion won the previous year. Operating losses remained almost unchanged at 64.18 billion won compared with 65.28 billion won. +++

+++ TESLA said it is lowering the price of its Model 3 by $1,100, after the electric carmaker ended its costly customer referral program. The second price cut this year brings down the cost of its least expensive variant to $42,900, according to the company’s website. The cost would drop to about $35,000, after about $8,000 of credits and fuel savings, Chief Executive Officer Elon Musk tweeted. In a reply to a Twitter user on when Tesla would drop the Model 3 base price to $35,000, without credits, Musk said, “We’re doing everything we can to get there. It’s a super hard grind”. Tesla, which does not use traditional advertising and marketing, introduced its customer referral program in 2015, but discontinued it on Februay 1st. The program had evolved over the years and in its latest version, Tesla’s personal referral codes gave new buyers six months of free supercharging and prizes for existing owners such as launching personal photos into deep space or invites to a Tesla event. Tesla delivered fewer-than-expected Model 3s in the 4th quarter and cut prices for all its vehicles in the United States to offset a reduction in a green tax credit. The company is rapidly ramping up production of its Model 3 and lower prices could help it reach a broader customer base than its pure luxury vehicles. When asked about lower prices in Europe, Musk tweeted that the value added tax of about 20 % and import duties of about 10 % usually result in a 30 % higher cost in Europe. +++

+++ TOYOTA ’s quarterly operating profit edged up as continued increase in sales in Asia, including China, offset lower sales in North America, its biggest market. Japan’s largest automaker lowered its full-year net profit forecast to 1.87 trillion yen ($17 billion) from a previous view of 2.3 trillion yen, citing unrealized losses on some of its equity investments, but reiterated its annual operating profit projection of 2.4 trillion yen. For the October-December quarter, Toyota posted an operating profit of 676.1 billion yen, up 0.4 % from 673.64 billion yen in the same period a year earlier. Its global retail sales rose 2.8 % to 2.71 million units in the quarter from 2.63 million units a year earlier, driven by a climb in sales to 464,000 units in Asia including China, from 404,000 during the same period last year. Sales in North America, which accounts for nearly 30 % of Toyota’s annual vehicle sales, came in at 680,000 during the quarter, from 735,000 a year before. Overall demand for cars in the region has stagnated over the past 2 years. China, however, has been a bright spot for Toyota, partly due to strong demand for its Lexus luxury brand that has helped it buck a wider slowdown in the world’s biggest auto market. The Japanese automaker sold 1.47 million vehicles in China in 2018, up 14 % on year. Toyota has said it aims to lift sales to 1.6 million in 2019 in the country, even as it and other automakers brace for another tough year. Auto sales in China last year contracted for the first time since the 1990s, hurt by the phasing out of purchase tax cuts on smaller cars and the Sino-U.S. trade war. The world’s second-largest economy grew at its slowest in almost 3 decades in 2018, and the pace is expected to weaken further this year. For now, lower tariffs on cars made in Japan are helping buffet many of its automakers from the slowdown in China, even as rivals such as Ford continue to post losses there amid China’s blistering trade war with the United States. Warming political ties between Japan and China are also helping Japanese automakers. Last year China and Japan pledged to forge closer ties as they look to deepen their relationship which in the past has hit rocky patches, prompting boycotts of Japanese products including autos. +++

+++ In the UNITED KINGDOM , January saw a 1.6 % dip in new car sales year-on-year, but sales of electrified vehicles surged. Sales of alternatively fuelled vehicles (AFVs; including plug-in hybrids (PHEVs) and fully electric vehicles (EVs) ) massively bucked the trend. Having seen a decline in December 2018, private sales saw a boost of 2.9 %, with 71,378 registrations. However, business and fleet demand fell 33.5 % and 3.4 % respectively. Despite this mostly negative picture, AFV sales rocketed 26.3 % to 11,014 units and a total market share of 6.8 %. Diesel registrations, on the other hand, fell by 20.3 % compared to January 2018. Meanwhile, petrol demand was on the rise again by 7.3 %. According to the SMMT (Society of Motor Manufacturers and Traders), sales of AFVs are expected to surge by about a quarter to around 177,000 units by the end of 2019. The Ford Fiesta entered the New Year retaining its title of best-selling new model, with 5,399 examples registered. It was a double win for the Blue Oval, as the Ford Focus took second place with 4,397 registrations, while Nissan came third with 4,270 sales of its Qashqai. SMMT chief executive Mike Hawes said the fact the figures were “broadly on par” year-on-year was “encouraging”, but pointed out that it was still the 5th consecutive month of decline. He called for “supportive policies”, especially on vehicle taxation, in order to encourage the uptake of newer, cleaner cars. A number of premium car makers saw big drops in new car registrations in January. Audi and Porsche suffered notable losses compared with the same period last year, recording falls of 27 % and 42 % respectively. Those figures contrasted with a significant year-on-year increase of nearly 80 % for Volvo, boosted by the launch of the new XC40. Jaguar Land Rover’s well-publicised sales decreases seem to be slowing (in the UK at least), with Jaguar recording a 2.4 % drop and Land Rover a 1 % drop. +++

+++ If VOLKSWAGEN realizes its ambition of becoming the global leader in electric cars, it will be thanks to a radical and risky bet born out of the biggest calamity in its history. The German giant has staked its future, to the tune of €80 billion on being able to profitably mass-produce electric vehicles; a feat no carmaker has come close to achieving. So far mainstream automakers’ electric plans have had one main goal: to protect profits gleaned from high-margin conventional cars by adding enough zero-emission vehicles to their fleet to meet clean-air rules. Customers have meanwhile largely shunned electric vehicles because they are too expensive, can be inconvenient to charge and lack range. The biggest strategy shift in Volkswagen’s 80 years has its roots in a weekend crisis meeting at the Rothehof guesthouse in Wolfsburg on October 10, 2015, senior executives told. At the meeting hosted by then VW brand chief Herbert Diess, 9 topmanagers gathered on a cloudy Saturday afternoon to discuss the way forward after regulators blew the whistle on the company’s emissions cheating, a scandal that cost it more than €27 billion euros in fines and tainted its name. “It was an intense discussion, so was the realization that this could be an opportunity, if we jump far enough”, said Jürgen Stackmann, VW brand’s board member for sales. “It was an initial planning session to do more than just play with the idea of electric cars”, he told. “We asked ourselves: what is our vision for the future of the brand? Everything that you see today is connected to this”. Just 3 days after the Rothehof meeting of the VW brand’s management board, Volkswagen announced plans to develop an electric vehicle platform, codenamed MEB, paving the way for mass production of an affordable electric car. For months after the Volkswagen scandal blew up in 2015, rival carmakers treated diesel-cheating as a “VW issue”, according to industry experts. But regulators have since uncovered excessive emissions across the sector and unleashed a clampdown that undermines the business case for combustion engines, forcing a sector-wide rethink. Now the ‘villain’ of dieselgate is likely to become the largest producer of electric cars in the world in coming years, analysts say, putting it in pole position to flood the market, should the demand materialize. “Decisions to convert the Emden factory (in Lower Saxony) to build electric cars, would never have happened without this Saturday meeting”, said Stackmann. However the full scale of VW’s ambitions were only revealed 2 months ago when it took the industry by surprise by pledging to spend €80 billion to develop electric vehicles and buy batteries, dwarfing the investment of rivals. It plans to raise annual production of electric cars to 3 million by 2025, from 40,000 in 2018. It’s a risky bet. With regulators and lawmakers, rather than customers, dictating what kind of vehicles can hit the road, analysts at Deloitte say the industry could produce 14 million electric cars for which there is no consumer demand. It’s also an all-or-nothing bet in the long run. VW, whose ID electric car will hit showrooms in 2020, has set a deadline for ending mass production of combustion engines. The final generation of gasoline and diesel engines will be developed by 2026. Arndt Ellinghorst, analyst at Evercore ISI, said betting on electric vehicles (EVs) could be risky because customers did not want to own cars dependent on street-charging facilities. “What if people are still not ready to own EVs? Will adoption be the same in the U.S., Europe and China?” he said. But he added that EU and Chinese emissions regulations made electric vehicle adoption inevitable and that being an early industry mover in that direction offered a “positive risk-reward”. Another by-product of dieselgate that quickened VW’s electric drive, according to the senior executives, was a purge of the company’s old guard, who became the focus of public and political anger. This empowered Diess, a newcomer who had joined as VW brand boss shortly before U.S. regulators exposed the carmaker’s emission test cheating. Diess, who joined from BMW where he helped pioneer a ground-breaking electric vehicle, has since been appointed CEO of Volkswagen Group, a multi-brand empire that includes Audi, Porsche, Bentley, Seat, Skoda, Lamborghini and Ducati. Carmakers have failed to mass-produce electric cars profitably largely because of the prohibitive cost of battery packs which make up between 30 % and 50 % of the cost of an electric vehicle. A 500 km range battery costs around $20,000, compared with a gasoline engine that costs around $5,000. Add to that another $2,000 for the electric motor and inverter, and the gap is even wider. Even electric start-up Tesla’s cheapest car, the Model 3, is on sale in Germany at 55,400 euros, priced just below a base model Porsche Macan. VW believes its scale will give it an edge to build an electric vehicle costing no more than its current Golf model, using its procurement clout as the world’s largest car and truck maker to drive down the cost. “We are Volkswagen, a brand for the people. For electric cars we need economies of scale. And VW, more than any other carmaker, can take advantage of this”, a senior Volkswagen executive told. The carmaker’s electric-vehicle budget outstrips that of its closest competitor, Germany’s Daimler, which has committed $42 billion. General Motors, the No.1 U.S. automaker, has said it plans to spend a combined $8 billion on electric and self-driving vehicles. Renault-Nissan-Mitsubishi said in late 2017 they would spend €10 billion by 2022 on developing electric and autonomous cars. “On a 2025 view, we expect Volkswagen to be the number one electric vehicles producer globally”, UBS analyst Patrick Hummel said. “Tesla is likely to remain a niche player”. VW’s test cheating using engine management software (defeat devices) resulted in the introduction of tougher pollution tests which revealed in 2016 and 2017 that emissions readings across the industry were up to 20 % higher under real-world driving conditions compared with lab conditions. This has raised the bar on the auto sector’s efforts to cut emissions of carbon dioxide, blamed for causing global warming. EU lawmakers in December agreed a cut in carbon dioxide emissions from cars of 37.5 % by 2030 compared with 2021 levels. This was after the European Union forced a 40 % cut in emissions between 2007 and 2021. “This goal is no longer reachable using combustion engines alone”, Volkmar Denner, chief executive of Bosch, the world’s biggest auto supplier, said about the 2030 proposals. Every gram of excessive carbon dioxide pollution will be penalized with a €95 fine from this year onwards. Strategy firm PA Consulting forecasts VW will face a €1.4 billion penalty for overstepping average limits in Europe by 2021, while Ford and Fiat-Chrysler face fines of €430 million and €700 million respectively. Daimler, BMW, PSA, Mazda and Hyundai will miss their 2021 average emissions targets, PA Consulting forecasts. Toyota, Renault-Nissan-Mitsubishi, Volvo, Honda and Jaguar Land Rover are on track to meet their goals. PA Consulting’s forecasts were extrapolated using 2017 registration data for each powertrain type and consumer buying trends, but do not include more recent sales trends. Ford, VW and BMW said they would meet their targets because of a push to sell more hybrid and electric cars in 2018. Daimler said it aimed to meet the targets and PSA said it would respect the targets. Carmakers have struggled to lower their average fleet emissions because of a shift in customer taste toward heavier, bigger SUVs, which make it harder to maintain the same levels of acceleration and comfort without increasing fuel consumption and pollution. SUVs are now the most popular vehicle category in Europe, commanding a market share of 34.6 %. Even Porsche, which makes lightweight sportscars, relies on SUVs for 61 % of sales. As the industry-wide scale of excessive emissions prompted Brussels to push through tougher laws late last year, VW executives concluded that purely electric cars were the most efficient way to meet carbon dioxide goals across its fleet. This was the point of no return, according to executives, when the company made the final electric investment decisions and committed to staying the course it had plotted after dieselgate. “After evaluating alternatives, we opted for electromobility”, chief operating officer Ralf Brandstaetter told about VW’s deliberations in November. +++

+++ WAYMO is engaged in talks with the Renault- Nissan- Mitsubishi alliance to bring more self-driving taxis to market. The companies are in the final stage of discussions and expect to announce a formal agreement as early as spring. Waymo has already signed deals with Fiat Chrysler Automobiles and Jaguar Land Rover to secure a diverse fleet of vehicles that will be converted to fully self-driving taxis at a facility in Michigan. Riders will consequently be presented with a choice between different types of vehicles, depending on the type of trip such as taking kids to a soccer game or going out to see a movie with a date. The Google owned company is widely viewed as the clear leader in autonomous driving, launching the first ‘commercial’ service in a limited section of the Phoenix suburbs this year. The Renault-Nissan alliance represents 10.8 million vehicles sold in 2018, though the company has apparently fallen behind in pursuing autonomous technology. The partnership between Waymo and Renault-Nissan may extend beyond a mere vehicle supply agreement, perhaps including a platform for handling reservations or payments, according to the latest unconfirmed report. +++

+++ Jaguar, Aston Martin and McLaren are in the running to win 4 of the 6 WORLD CAR AWARDS up for grabs at the New York International Auto Show in April. With the I-Pace, Jaguar has made it into the World Car of the Year (WCOTY) top10, the World Car Design top5, and the World Green Car top5. Meanwhile, the Aston Martin Vantage and the McLaren 720S have secured enough votes to be included in the World Performance Car category, where the 2 British firms will battle it out for the prestigious trophy. The icing on the cake for Britain is that the Jaguar E-Pace joins its big brother the I-Pace in the World Car Design top5. Further good news for the UK motor industry is that it has overtaken Japan in the current World Car Awards league table. Thanks to Aston Martin, Jaguar and McLaren, Britain is now the third strongest nation in the standings, behind super-strong Germany in first place and ever-improving South Korea at number 2. The second and final round of World Car Awards voting takes place in mid-February, with the top3 contenders in all categories being named at the Geneva Motor Show in March. The 6 winners will then be announced at a ceremony in New York City the following month. +++